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Were Hedge Funds Right About Dumping KB Financial Group, Inc. (KB)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about KB Financial Group, Inc. (NYSE:KB) in this article.

KB Financial Group, Inc. (NYSE:KB) was in 9 hedge funds’ portfolios at the end of June. KB shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 12 hedge funds in our database with KB positions at the end of the previous quarter. Our calculations also showed that KB isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are several tools shareholders use to evaluate publicly traded companies. Some of the less known tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the broader indices by a solid margin (see the details here).

KB_oct2019

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the key hedge fund action encompassing KB Financial Group, Inc. (NYSE:KB).

Hedge fund activity in KB Financial Group, Inc. (NYSE:KB)

Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in KB a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Ken Griffin

The largest stake in KB Financial Group, Inc. (NYSE:KB) was held by Arrowstreet Capital, which reported holding $37.4 million worth of stock at the end of March. It was followed by Orbis Investment Management with a $7.4 million position. Other investors bullish on the company included Millennium Management, D E Shaw, and Pzena Investment Management.

Because KB Financial Group, Inc. (NYSE:KB) has experienced falling interest from hedge fund managers, logic holds that there exists a select few money managers who sold off their positions entirely heading into Q3. Intriguingly, Glenn Russell Dubin’s Highbridge Capital Management said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, worth about $1.9 million in stock. Renaissance Technologies, also dumped its stock, about $0.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds heading into Q3.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as KB Financial Group, Inc. (NYSE:KB) but similarly valued. These stocks are Continental Resources, Inc. (NYSE:CLR), ZTO Express (Cayman) Inc. (NYSE:ZTO), iQIYI, Inc. (NASDAQ:IQ), and Magna International Inc. (NYSE:MGA). This group of stocks’ market values are closest to KB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLR 34 494249 3
ZTO 15 325627 -1
IQ 22 901265 0
MGA 14 257637 -13
Average 21.25 494695 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $495 million. That figure was $56 million in KB’s case. Continental Resources, Inc. (NYSE:CLR) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks KB Financial Group, Inc. (NYSE:KB) is even less popular than MGA. Hedge funds dodged a bullet by taking a bearish stance towards KB. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately KB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); KB investors were disappointed as the stock returned -9.5% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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